For the final state dinner of their eight-year White House reign, President Reagan and his wife, Nancy, were hosts of a nostalgic night of song and dance to honor their conservative friend, British Prime Minister Margaret Thatcher.

Breaking protocol, the Thatchers dallied Wednesday after the evening's entertainment and took a turn with the Reagans about the marbled Grand Foyer to the tune of "Shall We Dance?"Usually, the honored guests depart posthaste, but the Thatchers and the Reagans even switched partners as they smiled for the cameras.

"I wanted this to be special - it's very sentimental," said Mrs. Reagan, who said she got "a little teary" during the effusive round of toasts that the president and prime minister offered each other earlier in the evening.

The president, asked about his "last dance" with his first lady, quipped, "You don't mean that Nancy and I are breaking up, do you?"

With their 55th state dinner, the Reagans closed the book on one of their favorite White House events. Their elaborate celebrations recalled a tradition of glitz and glamour dating to the first White House social event, when John Adams greeted New Years Day revelers in 1801.

Although many presidents made the White House a stage for some of the nation's most elaborate and exclusive entertainment, the Reagans brought a Hollywood party style to an executive mansion shorn of hard liquor and dancing during the Carter years.

And so it was Wednesday evening, when pianist Michael Feinstein entertained with tunes ranging from Mrs. Reagan's favorite, "Our Love Is Here to Stay," to "I'll Be Seeing You," a tune played at the first state dinner honoring Please see THATCHER on A2

Thatcher on Feb. 26, 1981, a month after Reagan took office.

The black-tie tribute to Thatcher and her husband Denis was an apt finale to a glittering series in which Reagan, now 77, never seemed to tire.

As he has on every such evening, the president regaled his guests with anecdotes, both at the dinner table and among the demitasse-sipping guests in the Blue Room.

Even Thatcher was caught up in the wave of nostalgia. Her parting gift to the Reagans was a leather photograph album containing nine black and white photographs from the president's 1949 movie "The Hasty Heart," which he filmed in Britain.

In the toasts, superlatives were the order of the night.

"She is a leader with the vision and the courage to stay the course until the battles are won," Reagan said of his guest. Even though his voice was raspy, the president pressed on to say, "The impact of Mrs. Thatcher's leadership at home and abroad secures her place in history.

"As I prepare to depart this office in January, I take considerable satisfaction in the knowledge that Margaret Thatcher will still reside at No. 10 Downing Street."

The prime minister praised Reagan as "more than a staunch ally and counselor. You have also been a wonderful friend to me and our country."

Thatcher saluted the first lady as well, whose "charm, dignity and quiet but sure courage have won the hearts of millions."

She also said she wanted to "warmly congratulate" Vice President Bush and his wife, Barbara, on his recent election, adding that she looked forward "to working with you as a true and trusted friend."

Noticeably absent was Vice President-elect Dan Quayle, who wasn't invited.